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Archive for April, 2009

There Is Always Money to Fund Start-ups Just Be Focused and Creative – It’s Never Easy

Tuesday, April 28th, 2009

by: Geoff Ficke

We live in perilous financial times. As the markets have imploded, home prices cratered, jobs lost and incomes uncertain many people have become very risk averse. Very understandable! Many of us are more focused on maintaining our resources than expanding them in the face of so many unknowns.

The American dream to successfully start and grow a self-owned business is always going to be with us. However, in times like these, some entrepreneur’s have become less willing to take the plunge into the ownership class. They are willing to wait until things settle; markets calm and funding sources return to prior levels. This is sound strategy for the timid, but these people are probably never going to be truly successful as business pioneers.

Recently I was in Spain and read a story about some French film students. Like so many creative artists, these young people are passionate about their art and fully committed to their dream of creating full-length films, in this case human rights documentaries. This is a very hard type of project to fund, even in the best of times. The market is brutally competitive, distribution is scarce and profits are very elusive for all but a few of the best productions. How in the world would these students find the funding they so desperately craved?

They did it the old fashioned way: they got creative. They sold vanity to investors. 

Have you ever sat through and paid attention to the credits listed so fully at the end of any movie or television show? They seem to scroll on forever. Each caterer, assistant caterer, food taster, drinks coordinator or executive chef is listed, fully named and titled. Over the past 20 years the number of producers, executive producers, assistant producers, joint venture producers and specialty producers credited has grown exponentially. This gave the students a simple, brilliant idea: We will sell credits for investment.

They started with other students, family, then used the internet. Credits were sold for various levels of financial contribution to the production, some for as few as 10 euro’s. It is amazing what some people will do to see their name in lights. Money poured in and the students were sufficiently financed to complete their film, present it at European film festivals and arrange distribution deals in various European media.

This is but one example of how serious, passionate entrepreneur’s search for alternative paths to bring their passion to markets. The opportunity has never been greater for those willing to get in the game. Is money tight? Of course it is. Has new business startups slowed down? Of course it has. Are people still trying to launch businesses, follow their dreams and present consumers with better products? Of course they are.

When business is booming, venture capital seemingly flowing endlessly and entrepreneur’s crawling out of the woodwork, well guess what, there is relatively speaking, no more opportunity that there is in soft times. In up cycles there is more activity chasing a finite number of resources. In down times, there is significantly less entrepreneurial opportunity chasing a still existing, but somewhat diminished pool of capital. It closely equals out.

The available capital necessary for funding exciting new opportunities is readily accessible if the entrepreneur is creative. The world economy will come out of this problem time. The products and services that are being prepared now will be the big winners when the pent up demand for new consumer products, technology, cosmetics, sporting goods, wellness products and a host of other categories explodes as consumers return to markets. Just remember, if it were easy to be successful everybody would be. 

Venture capital and funding sources are always, especially now, seeking the best, most vibrant, creative opportunities. Make your product special, desirable and different and then, it really doesn’t make any difference what the economy is doing. You will be able to attract the resources needed to be successful.

If Soccer is the “Beautiful Game” Then Baseball is the Most “Perfect” Game

Tuesday, April 28th, 2009

by: Geoff Ficke

The world worships the game of “futbol”, which in America we call soccer. While soccer has enjoyed phenomenal growth as a popular sport for male and female children, and at the high school and college levels, the game has not succeeded on the professional level in the United States. In the rest of the world, however, soccer is the most rabidly followed of all sports.

“Futbol” has been ordained the “Beautiful Game” by the soccer mad fans addicted to the game. Because the use of hands to control the ball is not allowed, the game requires immense foot/eye co-ordination, speed, balance, aggression and a chess-like strategic vision of the complete field of play. The flow of the game, which can seem slow to casual observers, is part of the beauty of the game which heightens the passion the sport enjoys among its rabid followers.

I have lived in Europe and travelled widely, including second and third world countries. It is an amazing sight to see a country completely mesmerized, the population, men and women, old and young, glued to television screens, as key matches are contested. Games between clubs from different countries create an unbelievable outpouring of nationalism.

Soccer is a beautiful game. And if that claim is true, then I believe baseball is the perfect game. The pace of soccer and baseball are similar in that much of the play is spent in preparation for the difficult tasks of scoring, goals in soccer, runs in baseball. Both are total team games, and yet, both require individuals to perform at high levels. The shortstop in baseball is completely alone when attempting to field a hard hit ball, but he needs other players to perform their roles in order to throw out base runners.

The symmetry of baseball is amazingly perfect. The game has been idealized to have been invented by Abner Doubleday in an upstate New York field in the mid-19th century. Maybe, maybe not! However, whoever really crafted the rules of the game designed a field of play with perfect dimensions. The dimensions actually increase the drama of virtually every pitch and play.

Imagine if bases were closer, or further, than 90 feet apart. The bang-bang play at first would almost never happen. If bases were closer the stolen base would be automatic, even for slower runners. The bases are laid out in a diamond, which provides a perfect path for runners to pursue and fielders to target. The pitcher’s mound, a small hill, is 60 feet, six inches from the point of home plate. If the rubber on the mound, which the pitcher uses to gain purchase and leverage while throwing to the batter, were closer than 60’, 6” the batter would have almost no chance of ever hitting the ball. If the rubber were further back the hitter would enjoy an unfair advantage.

The strike zone is designed to balance the opportunity for the pitcher and hitter to succeed on a competitive basis. Three strikes and the batter is called out; but an at bat can be extended indefinitely by fouling off pitches. Four balls and the hitter earns a free pass to first base, thereby forcing the pitcher to throw strikes or give up base runners which can lead to runs scored.

The most wonderful thing about the game of baseball is best described by the great Yogi Berra’s famous statement, “it ain’t over ‘til it’s over”! Unlike every other team sport there is no time limit in baseball. The game does not end until the last out of the ninth inning is secured. It is possible, and does happen regularly, that a team can be seemingly so far behind in the run count that the outcome of the game seems inevitable, but a few hits, a few walks, an error and all of a sudden there is hope that the outcome will be reversed.

Spring training, baseball on radio, hot dogs and beer at the park and the opportunity to enjoy a game played at a leisurely pace on a warm summer night while kibitzing with friends all make baseball the “perfect game”. It is every bit as beautiful as soccer, but played well, there is no sport as perfectly crafted and structured as baseball.

The Beauty of the Beauty Business

Tuesday, April 28th, 2009

by: Geoff Ficke

My marketing consulting/product development firm reviews hundreds of prospective consumer products from every category imaginable, each and every year. Sporting goods, specialty foodstuffs, auto accessories, juvenile products, toys, games, shoes, jewelry, ready to wear and health and wellness products are only a short list of types of items we review for funding and market launch potential. I am often asked what is the space most easily penetrated by entrepreneur’s?

This question invariable pops up almost every time I lecture at a university or am interviewed by media. I used to be a bit arbitrary, almost opaque in answering. However, over the years the answer has come into sharp focus. The beauty product industry must be at the top of any list of entrepreneurial sweet spots for successfully launching and growing a start-up business.

Since Biblical times perfumery has been a highly desired artisan industry. Local flora and fauna have been compounded into scents and potions that add beauty to the human body, the atmosphere and religious worship. Cleopatra was famous for her fragrant baths, the Bible is full of references to sacred fragrant oils and in modern times the fragrance industry has matured into an international, multi-billion dollar business.

And yet, every year, inspired entrepreneurs bring new scents to market. Aromatherapy has boomed as the science and awareness of the mental and wellness benefits of specific aromas has been researched. The process of creating a completely new scent, packaging, branding and delivering the consumer a product that offers a different fragrance perspective has never been easier.

One of the great entrepreneurial commercial success stories in the history of the perfume industry was the story of Giorgio. The eponymous fragrance was born in a single Rodeo Drive boutique, Giorgio’s, in Beverly Hills in the 1980’s. The scent, a clear break with popular fragrances of the time, was overwhelmingly powerful. The distinctive top note made the boutique a destination for shoppers as word of mouth travelled quickly about the unique warmth of the dried down fragrance notes of Giorgio.

The Company did not have the necessary funds to launch nationally with major department stores. The owners decided to do a bit of guerilla marketing. They started to place scent strips impregnated with the Giorgio scent inside of local magazines targeting high end consumers. The power of the scent leached from the magazines and newsstands became fragrance cocoons for the Company. Mail order sales exploded, the campaign was quickly expanded to national women’s fashion magazines and a direct mail business was set up solely to fulfill consumer demand.

Soon the major department stores were falling all over themselves to stock and promote the Giorgio line. The Company was able to negotiate from a position of real strength and demanded, and received, prime space and location in every store that carried the brand. Sales exploded, the product became an international sensation, a key item in duty free shops and eventually was bought by consumer product kingpin Procter & Gamble.

Giorgio is an extreme example of commercial success. Nevertheless, if one were to examine the most popular fragrance, skin care, color cosmetic, bath and body lines and cosmetic accessories lines sold in various classes of trade (department store, mass merchant, drug store, etc.) from 1950, 1970, 1990 and 2009, the researcher would be surprised by the churning of brands that rose and fell.

Hazel Bishop was one of the most popular cosmetic brands of the 1950’s. Rose Milk was a wildly popular body care product of the 1970’s. Indian Earth was the flavor du jour of makeup products in the 1980’s. Chen Yu was the original classic nail care line after World War II. Francis Denny, Germaine Monteil, Imperial Formula and Alexandra de Markoff were popular specialty store skin treatment brands. All were founded by entrepreneurs, enjoyed widespread distribution, commercial success, fell from grace, and were replaced by a newer generation of entrepreneurial products.

The beauty industry has relatively low barriers to entry. Private label laboratories exist in every area of the country and are eager to satisfy creative demands of new entrepreneurs with fresh product concepts. The ability to bootstrap a product or line exists in the cosmetic industry as in virtually no other. Limited amounts of capital can be leveraged and made to go a long way.

Competition is, of course, very stiff. But competition is brutal in every mature industry. However, in the cosmetic business, there is an insatiable demand for  new, exciting,  and different products. The industry is huge, but the opportunity to identify and fill tiny niches is virtually limitless for entrepreneurs willing to commit to their concepts.

Take a stroll through a Sephora or Ulta store. Virtually every product stocked in these beautiful retail venues was crafted and branded by an entrepreneur in the recent or distant past. Estee Lauder is one of the world’s great brands. However, Mrs. Lauder started in the early 1950’s making a single cream in her apartment. The hugely successful professional beauty salon brands Redken and Matrix were created and nurtured by Jherri Redding and Arnie Mitchell respectively. They are mighty today, but they were like tiny mustard seeds at birth before evolving into industry icons.  

The rise of the internet, direct response, electronic retail, specialty retailers and mall kiosks has changed the landscape for selling all types of consumer products. Today’s cosmetic entrepreneur has more opportunity to penetrate the marketplace than ever before. The beauty of the beauty business is that the truly inventive can enter this marketplace and grow their opportunity at their pace, with limited capital and enjoy a real chance for a successful outcome. This cannot be said about many business opportunities.

The Board Game Revival

Tuesday, April 28th, 2009

by: Geoff Ficke

Each year in February the world’s largest Toy Fair is held in New York City. This is the Mecca for buyers, sellers, promoters and inventors of toys, dolls, plush toys and games. Every conceivable type of whimsical product is displayed and hyped with gusto, creative marketing and some bluster. The event is attended by people from over 100 countries.

This year the Toy Fair was reflective of what is going on in the world economy. Attendance was down, there were noticeably fewer vendors displaying product, the glitz was considerably dimmer and the overall mood was very somber. The world’s largest toy companies Mattel, Fisher Price and Hasbro reported sales declines for the recently concluded 2008 year. Mid-size and smaller vendors had even worse news to report and many seemed to be barely hanging on, hoping for a robust 2009 Holiday selling season to resurrect their fortunes.

For the past decade or more the exciting growth in the toy/game world was in electronic products. Electronic Arts became a juggernaut by producing action video games targeting the highly desirable male teen demographic. However, this year even Electronic Arts has struggled, sales dropped and just recently the Company announced the resignation of their most prolific game design engineer.

Interestingly, there was one area of vigor and strength touted at the Toy Fair: mundane board games. Yep, the kind of game families used to play around the kitchen table after dinner. Parents and kids interacting; while they enjoyed time together, talking, negotiating, competing, laughing and bonding. Great concept! Board game sales actually enjoyed a record year.

Hasbro introduced several new iterations of classic Monopoly. The world’s most popular board game, Monopoly is played by almost 500 million people all over the world. The iconic game, crafted during the Depression to mimic the various strata of society during that time, is the gold standard in the board game space. At this year’s Toy Fair new board game offerings were on display as never before and seemed to be the center of renewed interest from buyers noting the tenor of the times. The simple board game is enjoying a revival, in part because the times we are living through have adjusted our sites to the importance of quality family time.

Video games are typically solitary or demographic specific products. Board games offer a wholly different play platform. An eight year girl, her 10 year old brother, visiting college age sister and mom and dad can all enjoy a game of Sorry. The game is played at a leisurely pace. Lots of kibitzing is part of the fun. Soda’s and popcorn are ubiquitous while the family enjoys the game.

My consumer product consulting firm is approached with a number of toy and game submissions each year. Many are quite ingenious. The marketplace for this type of product is extremely competitive, as are most mature consumer product categories. However, the market is always open to novel, inventive new products. The Great Depression, similar in some ways to our current economic circumstance, was a Golden Age for consumer product inventiveness. The opportunity to launch successful products today is just as ripe.

The key to launching a successful board game, as with so many other consumer products, is simplicity. Make sure the play rules are quickly and easily understood. If playing the game requires a tutorial and lots of qualifiers, the likelihood for achieving retail placement and commercial success is minimal. It is important that the competitive aspects of the game depend upon a mixture of basic skill and chance. Every player, no matter age, education or experience, should enjoy a reasonable chance of winning.

The world is undergoing a sea change caused by an economic malady that affects virtually all of us. The opportunity to profit from this adjustment of societal values and attitudes offers entrepreneurs unique possibilities to provide products with timely features and benefits that fit the times. The return to popularity of board games is symbolic of this new reality.

The Invention of Interchangeable Parts Terrified Government 200 Years Ago and today

Monday, April 13th, 2009

by: Geoff Ficke

Since the beginning of time, until the middle of the 19th century the production of goods was conducted on an artisan, piece by piece basis. Over these many centuries the center of the individual’s universe was the local environ where commerce and enterprise were conducted on a small scale, often bartered basis. The idea of mass production was impossible to fathom. People predominantly lead lives of tremendous struggle and burden simply trying to subsist in an agrarian centric world with few hard goods produced other than tools, rudimentary clothing and dwellings.

In Europe in the Middle Ages the creation of guilds resulted in specialized production of goods. The members of a specific guild would concentrate on producing bricks, tool making, construction, metal work, shipping, etc. These were the precursor organizations to modern unions. They controlled who and how many could become guild members. The guilds fixed wages and prices. They were usually licensed or appointed by host governments in return for acceding to local laws, taxes and regulations.

In the early 18th century in France there began a movement among factory owners seeking to create more streamlined, profitable means of production. The idea of modern mass production was still almost a century away. In order to organize large scale industrial production sources of interchangeable, purpose built parts would be required. This did not yet exist.

In the late 18th century, French gunsmith Honore Blanc proposed to the French army that he mass produce muskets. To prove that he could perform as he claimed, Mr. Blanc arranged a demonstration for the armors of Napoleon’s army. Using batches of interchangeable parts Blanc quickly assembled a number of muskets. Still, at that time, muskets were built one by one, each piece turning out to have its own quirky character. Blanc had unveiled the elemental secret of mass production keyed by his use of interchangeable parts.

While acting as envoy to France during the American Revolutionary War, Thomas Jefferson visited Honore Blanc’s shop. Jefferson was a man of agriculture not industry. Nevertheless, he sent details of Blanc’s methods back to America and inadvertently helped accelerate the industrialization of his homeland.

The inventor Eli Whitney is credited with taking Honore Blanc’s techniques and applying them to mass production of machinery. Later these methods were the basis for the mass production of clothing, typewriters, stem engines, sewing machines and munitions among hundreds of other products. Whole industries were thus born and industrialization rapidly assumed preeminence as the preferred means of production.

What of Honore Blanc? By 1806 the French government decided that Blanc was a threat to the states control of the means of production and a threat to the old crafts (guilds, unions). The system of production he helped pioneer was shut down and outlawed. The French government made the inane argument that workers not crafting a complete product from start to finish could not produce harmonious products.

To this day governments all over the world fear the mobility of production. Local content laws are still common. Statutes, regulations, bureaucracies and taxes are levied to control, and often hinder, production of goods in the most efficient manner.  Certain classes of workers are protected and assisted to the disadvantage of other laborers. Winners and losers are chosen by bureaucrats who have never produced a single widget.

The ability to interchange parts is the lynchpin of modern mass production and the success of capitalism. This system of production of goods has lifted billions of people out of poverty and misery. Government revenues are almost exclusively derived from the fruits born of mass production. And yet, government invariably cannot recognize the genius of entrepreneurial organization of the means of production, the system that has produced so much, for so many, so inexpensively.

The Evolution of Invention & Discovery Speaks Volumes of Modern Prosperity

Monday, April 13th, 2009

by: Geoff Ficke

Recently I was ambling around the internet, researching lecture and article topics. I stumbled onto a Wikipedia site that at first seemed quite banal: Timeline of Historic Inventions. This link offered a chronological listing of historic inventions from the Paleolithic period, through the time of Christ, the Dark Ages, Middle- Ages and on to modern times. Perusal of the listing of inventors and their inventions was interesting on several levels.

First was the attribution that could be applied by geography for the specific inventions. Cement in Egypt, rice in India, the Trebuchet in China and hundreds more hugely important inventions could be assigned as having originated in specific ancient lands. Many of these geographic locales are recognizable today, while many others, though identified, have been lost with the passage time and the disappearance of their historical importance.

Second, many of the inventors are identifiable by name, even many of the most ancient ones. Attribution for creation of the encyclopedia is given to Speusippus, the odometer to Archimedes, the kite to Lu Ban, linguistics to Panini, and plastic surgery to Shushruta.

Third, and most interesting, is the sheer volume of inventions, most of great import and use to this day that were created in ancient empires that fell from great heights and lost most remnants of their glory. The mathematics discovered in the Middle East, the medicines and surgeries pioneered on the Indian sub-continent, the vast array of defense and engineering advances created by the Chinese, the foodstuffs, trade routes and tools from Africa are only a small sample of the amazing, wealth generating advances produced by old world societies. And yet, almost inevitably, each of the lands that germinated this amazing creativity evolved into modern times in greatly diminished status.

As you scan the Wikipedia site, “Timeline of Historic Inventions” you begin to see an accelerating scamper of inventiveness from “old world”, eastern centers to the “New World”, western hemisphere. By the Middle Ages creativity has begun to blossom and explode in the west, while the ancient centers of inventiveness for almost 4000 years seem to expire.

The western inventors seem to suddenly breathe a different air. Their technology becomes more commercial, more targeted to mass production and more advanced. The ancients gave us cotton, beer, paper and sails, all useful, important and still in great use. The moderns gave the world machines that revolutionized work and enabled scale and mass production to be levers of new industry and international trade. James Watt, Leonardo da Vinci, Benjamin Franklin, Johannes Guttenberg and Galileo Galilei are but a small group of inventors who revolutionized how societies produced goods, worked, ate, learned and enjoyed leisure (for the first time).

From the 15th century until the present day almost all of the great inventions were produced in the New World west. The formerly robust creativity of the ancient east has expired. The Indian and Chinese economies have rebounded from centuries of torpor to become modern productivity marvels, however, in almost every instance they reproduce product that is designed and invented in the west.

Why has the Middle East become insular, Africa largely a disastrous economic backwater,  Latin America consumed by corruption and poverty and so many other areas of the world beset by poverty and unending misery? Despite the current economic struggles all countries face, does anyone believe that Canada, the United States and the democracies of the European Union will not lead the world in standards of living, prosperity, longevity and freedom for the foreseeable future?

The ability to invent is crucial. However, after crafting an invention, there must be a system in place to allow for commercialization of the invention and the pursuit of reasonable profit to reward the risks undertaken to penetrate markets. This means that rule of law, property rights; protection of intellectual property (patent/trademarks/copyright law) must be codified and enforced.

Capitalism in its various forms is still the greatest generator of wealth and opportunity ever invented. Czarist and communist Russia were full of inventive citizens who were stifled by a system that did not reward innovation. When these people emigrated to the west they created new industries (movies, cosmetics, apparel, technologies, television, etc.) that made them prosperous and benefitted society by providing employment and improving lifestyles.

All over the world there are innovators seeking to escape bondage or states of despair, make their way to the “New World”, and by utilizing our system create new products and industries. We all prosper from this drive to invent. The ancients were inventors of technologies, things of value and usefulness. Unfortunately, they did not reside in places and times where lasting “rules of law” were applicable. Without these basic protections invention, individuals and societies cannot flourish. Not ever!

Depression Era Lessons for Today’s Entrepreneurs

Monday, April 13th, 2009

by: Geoff Ficke

The vast majority of an educated modern populace has developed a pretty vivid tapestry of what life was like during the “Great Depression”. The visions of struggling dirt farmers like the Joad’s in Steinbeck’s “The Grapes of Wrath”, the big city soup lines, the tent cities for thousands of homeless and photographs of men selling apples on street corners have burnished in many of us a searing image of hopelessness and despair.

Today, the United States is sharing the most serious economic malady since the “Great Depression” with countries all over the world. While not approaching the absolute calamity of the 1930’s, the damage done to our wallets and psyches is nevertheless daunting and bruising. Businesses, organizations and individuals are understandably fearful and have curtailed spending in lieu of conserving capital. Risk taking, the key to maximizing gain, has been virtually shut down. Small business growth and development has been strangled. Entrepreneurs have hunkered down, fearful of the vagaries of a marketplace that seems to have no stomach for new products and ideas.

In times like these it pays to study the lessons of history. The Great Depression was bleak for so many, of course. Nevertheless, it was actually a fertile era for creativity and entrepreneurial activity.

People were desperate to make every purchase count, to leverage every dollar spent and obtain maximum value. The result was that an exciting array of creative breakthroughs came to market to satisfy the greater demand for economy.

The importance of consumer advertising was magnified and became a much more critical tool utilized by packaged goods manufacturers to woo value conscious consumers. Heinz ketchup, Palmolive soap, Campbell soup, Westinghouse appliances, Revlon and Max Factor cosmetics and Hormel Spam enjoyed an explosion of growth created by new sales promotion concepts. Billboards, mass advertising, coupons and sampling became ubiquitous. Local, regional and national agencies evolved to assist manufacturers in promoting their products in new, exciting ways. Barn advertising for tobacco products and Burma Shave road signs added needed revenue to beleaguered farmers and roadside landowners.

The Studebaker Motor Company had evolved from a 19th century maker of hand carts and wheelbarrows to a struggling auto carriage manufacturer. The Company enjoyed modest success until the Great Depression. Recognizing opportunity, Studebaker went back to its roots as a maker of work conveyances and began to produce the Studebaker paneled work truck. At a price of around $600, this workhorse vehicle enabled thousands of laborers, handymen and small contractors to eke out a living hauling, building and scratch farming.

The ball point pen, nylon, the radio, radar, the Land camera, the photocopier, sticky tape, the television, FM radio band, the helicopter, the jet engine and the electric razor are only a few of the inventions that were perfected and came to market during the 1930’s. Inventors did not stop their pursuit of fresh, valuable innovations. They seized the reality they were confronted with and targeted practical solutions to problems that needed to be addressed at that time.

The same opportunity is available today. The opportunity to create products or services that offer great utility and excellent value is appreciated by the consumer more than at any time in recent memory. There is a rush to basics, store brands, no frills products that perform and are sturdy. The inventor that can address these contemporary needs will find a willing acceptance from investors, consumers and retailers.

There is never a better time than NOW to launch a product, start a business or license a product. This is true when markets are booming, or when the economy is in a trough. There are always excuses made for not making a sale, not closing a deal or not taking that chance, that chance that can change one’s life. Every economic age offers the opportunity for success for those willing to address real needs with inventiveness. History offers us plenty of proof.